Contrary to popular opinion, stock market trading need not be very difficult and reserved only for professionals. Nowadays, especially with the advent of the Internet, even laymen can learn to trade stocks and actually participate in such an activity and gain profits from it. Essentially, stock trading involves buying and selling stocks and shares when the conditions are ideal (i.e., when you can make a profit in each transaction). For most people, it may seem like a highly risky game of chance, but really, all it takes is knowledge of basic information and some practice, along with some tools and strategies to help you out.
Given that stock trading is like a game of logic, one who wants to learn to trade stocks can only be an effective trader if he or she knows how to choose the proper strategies based on the latest stock picks or daily stock advice. This article presents simplified explanations of the top three trading strategies you can use: trending, day trading, and swing trading.
Strategy #1: Trending
Trending is, perhaps, one of the most common trading strategies used by traders—be it professionals or beginners. If you want to learn to trade stocks effectively, then you need to understand what “trending” means. Trending refers to a trading strategy, in which one maximizes an opportunity to earn through the proper analysis of trends (in stocks or shares) that move in a particular direction. Once a trader spots an upward trend, he or she enters into a long position; on the other hand, if the trader spots a downward trend, he or she can enter a short position. This trading strategy rests on the assumption that a trend can persist in the future, guaranteeing profits depending on the position entered by the trader.
Strategy #2: Day Trading
Day trading gets its name from the way trader opens and closes a position within limited time, usually within just a day.
Preferably based on expert daily stock advice, day traders try to gain profit from the fluctuations in the market. Profits can be earned quickly and easily without having to wait for weeks and months, patiently checking on the stock trends and market movements. The fast turnover is due to the fact that in day trading, positions are held over a single day and are closed once the day’s trading has ended. Although this may offer handsome returns for each effective transaction, this is reserved only for those who have intermediate and advanced trading know-how because it involves a lot of logical assumptions that need to be based on hard data.
Strategy #3: Swing Trading
In contrast with day trading, swing trading involves holding a position beyond just one day; it may involve watching a particular stock or share for weeks or months before the right opportunity is recognized. In addition, swing trading differs from the aforementioned strategies because traders specializing in this strategy must gain expertise in at least a single industry so that they can effectively utilize this strategy. Nevertheless, this is the ideal strategy for those who cannot spend time on intensive daily monitoring.
Regardless of which strategy you wish to use, remember that constant practice is the best way to gain master of these. Good luck!